The global bond rout picks up steam this morning, with the 10-year Treasury yield up another 5.3 basis points to 2.441%, the 10-year Bund up 4.8 bps to 0.324%, and 10-year yields in Italy, Spain, and the U.K. higher by similar amounts.

Rolling around the minds of fixed-income investors is incoming Treasury Secretary Steven Mnuchin's consideration of locking in still-historically-low interest rates through the issuance of 50- or 100-year government bonds. At the pace rates are climbing, he better hurry.

If the previous period was characterized by increasing globalization, relatively innocuous fiscal policies, and sluggish domestic growth (along with low inflation and falling bond yields), says Dalio, a Trump administration is likely to see decreasing globalization, aggressively stimulative fiscal policy, and increased growth (along with rising inflation and bond yields).

There's a really good chance, he says, that we're at a point of one of those major shifts - think the 1970-71 shift from the low inflation of the 60s to the runaway prices of the 70s, or the 80s shift back.

The bottom line is that things won't be good for bonds, and then the question becomes at what point does that start to pressure other asset prices.

"I would like to come back as the bond market, you can intimidate everybody," famously said James Carville in the early 90s as every fiscal move made by his boss thought to be at all inflationary was met with a selloff in long-dated government paper.

The bond vigilantes are seemingly back, and apparently telling the president-elect to go easy on the deficit spending - taking the yield on the 10-year Treasury from 1.70% Tuesday night to as high as 2.28% earlier this morning.

"Trump has all these big spending plans, but he doesn’t have the revenue to pay for it,” says Allianz's John Bredemus, in a quote that could have been lifted from Pete Peterson, circa the early 90s.

Bond funds have seen nearly $200B of inflows this year versus outflows of $60.5B for equity funds, but the sharp rise in rates post-Labor Day spooked some as the fixed-income funds experienced outflows for the first time in ten weeks.

Looking closer at the bond fund category finds money moving favoring shorter-term maturities rather than further out on the curve. Whether it's a trend or not remains to be seen as rates at the long end have reversed sharply lower this week.

At 1.61%, the 10-year Treasury yield has about returned to its level at the start of September.

The extra yield that investors demand to own 30-year Treasurys rather than five-year notes, a measure of the yield curve, increased for a ninth straight day today. That’s the longest streak since 2012.

Traders are favoring shorter maturities, anticipating the Fed will continue to keep interest rates in check, potentially stoking inflation and eroding the value of debt maturing decades in the future.

The last time the yield curve steepened this quickly was Aug. 2012. At the time, primary dealers were offloading billions in 30-year bonds to the Fed as part of its debt-buying program.

"This bond story is not dead by any means," says Western Asset Management's Robert Abad. American growth and inflation are likely to remain "muted," and thus a bet that U.S. interest rates will remain structurally low "is a good trade," he says.

"It is a natural disposition" of investors to take some profits, says Templteton's John Beck, reminding bonds put in a big rally prior to the current rout. "Where is the catalyst that is immediately going to change the interest rate path?"

Included in the report is an amazing chart showing real returns by the decade in developed bond markets. Prior to the 1980s, decades of negative returns were well mixed in which those of positive returns across every economy. From 1980 to present, though, there's not one period of negative returns for even one developed-economy bond market. Not one.

The best case scenario as domestic financing markets start to struggle will be some form of capital controls. One might argue this is already occurring through new regulations all-but-forcing banks, insurers, and pension funds to buy domestic paper for reasons other than value.

Worst case is a "hard break" in which a major country defaults on its debt.

Neither scenario is likely to be favorable for the owners of long-dated fixed-income assets.

Opining on the markets and the economy in his latest webcast, Jeff Gundlach says the Fed is becoming increasingly irritated with Bloomberg's World Interest Rate Probability (WIRP) function. The central bank, he thinks, wants to show its independence from traders by hiking rates even though WIRP is below 50%. Typically, it would take a WIRP reading of above 70% to see a Fed move.

Hartnett, who turned bearish on government paper just ahead of April 2013's "taper tantrum," says a pickup in U.S. inflation or global economic growth could be the catalyst that sparks "taper tantrum II."

JPMorgan's Oksana Aronov agrees: "You have a tiny amount of upside, and then this tremendous amount of downside ... We are in the field of assessing risks - that’s not a risk that should be attractive to any investor.” In the JPMorgan Strategic Income Opportunities Fund, where she works as a strategist, cash is up to 18% of assets, and sovereign debt down to less than 1%.

According to Hartnett and team, she's not along. Money managers have raised cash levels to a near-15-year high of 5.4%; with investment-grade bond fund managers' cash levels up to 12% - the most since 2009.

Schwab (NYSE:SCHW) didn't get into the ETF business until 2009, but with $7.69B of inflows YTD, the operation manages $50.4B in ETF assets, making it the fifth-largest U.S. ETF sponsor.

A big reason is fees, and Schwab's funds have among the lowest expenses in the industry - in some cases lower than competing funds at Vanguard (whether there's a profit in that is a different story).

The Schwab U.S. Large Cap ETF (NYSEARCA:SCHX) and Schwab U.S. Broad Market ETF (NYSEARCA:SCHB) are the company's two largest ETFs, and each have a barely visible 0.03% expense ratio. They've brought in $681.5M and $569.6M of inflows, respectively, this year, according to S&P Capital IQ, which rates both ETFs Overweight.

In fixed-income, the $3.18B Schwab Strategic Trust (NYSEARCA:SCHZ) is 2nd in inflows this year among Schwab funds, with $994.3M. It's 0.05% expense ratio is lower than comparable ETFs from iShares and Vanguard. S&P Capital IQ rates it Overweight as well.

"Global yields lowest in 500 years of recorded history," tweets Bill Gross as rates globally renewed their plunge this week. "$10T of negative rate bonds. This is a supernova that will explode one day."

First there was the "new normal," suggesting a generation of subdued economic growth, then there was the "new neutral," describing an era of lower than normal policy rates.

To describe what he sees as a phase of diminishing central bank effectiveness, Pimco's Richard Clarida uses the term "insecure stability."

"We believe there are diminishing returns to monetary-policy activism," he says. "The game is only going on because of massive quantitative easing, negative zero interest rates and emerging economies ... Our view is that investors cannot get a false sense of security by extrapolating past trends. So you see a world that now appears to be stable, but is not very secure.”

“There is the distinct possibility,” says Pimco, “that monetary policy exhaustion and an overhang of debt in some major economies pose material threats to the sustainability of the global recovery and financial stability.”

"The system itself is at risk," says Bill Gross, leaning against four decades of instinct by aiming to go short credit. At some point, he believes, central bankers are going to run out of tools with which to prop up asset prices.

Not buying stocks and not buying high-yield "comes at a price," he warns. That price is low returns. “I know that my investors want three, four, or five percent, or else they can keep it in the bank or stuff it in their mattress."

Fixed-income ETF net inflows of $32.5B in Q1 were nearly triple the average of the prior 12 quarters according to Marketfield Asset Management. A notable beneficiary of the trend was the iShares Core. U.S. Aggregate Bond ETF (NYSEARCA:AGG) with about 10% of that $32.5B. This BlackRock (NYSE:BLK) stalwart has pulled in a "remarkable" 14% of all fixed-income ETF flows over the last three years and now has AUM of $34.8B.

The Vanguard Total Bond Market ETF (NYSEARCA:BND) is growing more slowly, but has the 2nd-fastest 3-year growth rate and AUM of $28.4B.

The cash, says Marketfield's Michael Shaoul, doesn't appear to be coming from other fixed-income ETFs, but instead continues a shift from actively-managed to passive funds. Shaoul also notes that flows weren't limited to those benchmark ETFs, but also included strong moves into Treasury, investment-grade, and high-yield ETFs.

Pimco expects global real GDP growth of 2-2.5% this year, down 25 basis points at both ends from its previous forecast. Actual GDP growth was 2.8% in 2014, and 2.6% last year, so the 2016 forecast sees the slowdown continuing.

With U.S. monetary policy to some extent being "made in China," the team sees just one or two rate hikes from the Fed this year.

The good news: The risk of recession remains low - at most 20%. The expansion is an old one, but expansions don't die of old age, reminds Pimco. It takes serious economic imbalances and significant central bank tightening.